A big deal

Boyd Gaming is looking at acquiring Penn Entertainment in a deal worth as much as $9bn. Reuters reported the news on Thursday based on information from unnamed sources.

If the deal goes ahead, it would be the biggest merger in the US gambling space since Eldorado Resorts took over Caesars Entertainment for $17.3bn in 2020.

a 10% jump in its share price in the hours after the news broke

Penn Entertainment, which operates the ESPN Bet brand and 43 land-based gambling facilities nationwide, saw a 10% jump in its share price in the hours after the news broke.

Numerous hurdles

Boyd Gaming is the smaller of the two companies in terms of revenue, generating $3.7bn last year versus $6.36bn for Penn. It also currently has $7.8bn in debt so it would need some help to proceed with a transaction.

getting the green light from Walt Disney

Approval would also be necessary from regulators in numerous states, the owners of the real estate on which many of the two companies’ casinos lie, as well as Disney, due to the relationship that its ESPN subsidiary has within Penn.

The issue of overlapping casino operations in certain states would also likely require Boyd Gaming to sell some of the properties, similar to when Caesars and Eldorado merged.

Appetite for a sale

While Reuters’ sources said it is still unclear if Penn will even take part in any discussions, some major shareholders of the Pennsylvania-based company have been vocal about the direction of the company. Donerail Group, in particular, questioned the approach in recent years and called for the consideration of a total sale.

Some of the most controversial moves Penn has made in recent years include buying Barstool Sports for $551m before selling it back only a few years later to Dave Portnoy for just $1 and giving nearly $100m in compensation to CEO Jay Snowden despite the ongoing underperformance.